What Easing Dollar Means For Asian Markets — Florian Weidinger Explains

Landscape for global investors has been rapidly shifting in terms of policy changes, outlook on various global markets and finding spaces that offer both value and growth.

Foreign investors have always been fascinated with India on paper. Foreign flows have been dry but as things shift on a larger scale, it can change in the Asia markets, according to Florian Weidinger, chief executive officer of Santa Lucia Asset Management Co.

Now that the US is no longer actively pursuing a strong dollar, things change for the Asian central banks and the emerging markets.

"Asian central banks have been running interest rates that are high as they have been defending against inflation and the US dollar," he said. "Easing of dollar will give these banks room and so, emerging market inflation could ease with the US dollar easing."

The lowering of the US dollar index will have an impact on even the rice and food inflation in various Asian economies. As a lower index would shift focus to rate cuts that would mean incremental funds moving into global equities, according to Weidinger.

"Asian central banks can worry about their own markets rather than defending against the dollar. If we were to see more permanence to the dollar move, then Indonesia would be most spring-loaded," he said.

Weidinger said the shifts in the global markets have put India into the list for the global investors. "Foreign investors have been fascinated but the flows have been poor. Despite this, the domestic investors have carried flows," he added.

"Local investors have been driving these markets like China and we have started to make purchases in India after a year," the portfolio manager said.

The Indian equity market has come back into focus following the small and mid-cap corrections. Weidinger highlighted that most foreign institutional investors were very focused on stocks generating cash flows and giving dividends.

"Seeing a few names coming back up, so adding them back to the purchases. We are open to investing in large and mid-cap space depending on the opportunity," Weidinger added.

While the small and mid caps may be available at attractive prices post correction, Weidinger spots the pocket of value elsewhere.

"Two places we are investing in is large caps like ONGC as prices have come down. But we quite like the InvIT space in India. InvIT is trading at the wrong price in India compared to global peers," Weidinger said.

He also pointed out that the sector was pressed wrongly, especially for overnight results. The goods and service exports have grown with Make in India, Weidinger added.